First, no VPL's (visible panty lines!) You don't have to "go commando" or wear a thong if you don't want, there is underwear available with invisible lines or try bodyshapers like spanx to hold in those problem areas. Nuff said.
on the street
To define your waist add a belt, but be aware of the weight of the knit, if it's too bulky forgo the belt.
Take a good hard look at your body type. If you have a curvier body, make sure that the dress is not too tight or you may want to opt for leggings or jeans underneath.
La Redoute ribbed sweater dress $34.99
How short is too short? Shorter women can wear the mini style of this look and it make legs look a mile long. The tallers can go a little shorter than normal if you pair with tights or boots, but your dress shouldn't look like a shirt a la Lindsay Lohan:
Out shopping for pants, perhaps?
bebe long sleeve minidress $89; embellished sweater dress $88.80 @ Arden B (on sale!)
Stella McCartney oversized sweater dress $865; Temperley London knitted dress $1,292
Old Navy turtleneck sweater dress $22.99 (on sale!)
frosted sweater dress $178, soft pour sweater dress $188 both from Anthropologie
Francesca's Collections turtleneck sweater dress $42; Missoni turtleneck sweater dress $299 (on sale!) @ Intermix